And if you enjoy meeting new people, sharing knowledge and touring places, then this may be even more enjoyable for you.

To start a walking tour business that will meet the needs of your target customers, you need to factor in all the necessary steps and processes. That’s why we’ve created this guide to direct you.

Here you’ll learn all the steps, from the initial phases of researching and designing your business to finally launching your walking tour company. We’ve also covered the legal aspects involved in starting your company.

Let’s dive in.

1. Do your research

The more information you have about walking tour businesses and how to begin one, the easier it’ll be to start and grow your own. For this reason, you need to do your research beforehand.

Market environment

Know who your target clients/ customers are and the market situation around starting your walking tour businesses.

For example, people who require the services of a walking tour company are mostly tourists interested in learning more about a town or a certain region. Travelers who want to discover hidden gems also look for walking tours to help them explore.

Apart from knowing your target customer, there are other areas concerning your market you need to research on.

Here are questions that can help you gather the necessary information:

• Who are my potential customers and what is their persona?
• What problems does this business/service solve?
• How big is the demand for walking tours?
• What is the competition like?
• What sets me apart from my competitors?

For a more detailed guide on market research, check out this article on how to conduct market research.

Know the requirements

After gathering information about your market, it’s important to know what requirements you need to start a walking tour business.

What are your state’s regulations concerning operating a walking tour? Are there specific requirements for opening and running a business in general? Do you need to meet certain health and safety regulations?

If you realize that some of the requirements may take time to fulfill, we suggest that you head over to the section on registering your business. Begin the process at this point so you have all the documentation ready by the time you are done setting up your business design.

Estimate the cost

Next, do your research on the amount of capital you’ll need to start and run your walking tour business up until you break even.

This will prevent getting stuck along the way due to a lack of finances.

The good thing is that walking tour businesses don’t require too much capital upfront. And if you do the tours yourself, you’ll cut the cost of hiring people at the beginning which will save you some money.

The major costs will probably go towards marketing your business – you’ll be doing a lot of this, especially at the beginning.

2. Design your tour

Now that you know what you need to start a walking tour business, it’s time to design your tour.

How exactly will you run your tours? What will differentiate you from your competitors? How much will you charge for tours?

Writing down detailed answers to these questions will assist you in designing your walking tour business.

Create an itinerary

Part of designing your walking tour involves creating a clear plan of where you will go/ which places you’ll visit, at what time and on which days of the week.

Your itinerary may be informed by the niche you choose for your tour. For example, you may focus on historic sites or local cuisines of a region. This will determine what places you will take your customers to tour.

Apart from the activities involving your clients, also have a breakdown of what you will be doing each day in terms of running your business.

With time, your activities will change as your business grows and you get more clients.

Differentiate your tour from competitors

It’s not enough to offer walking tours to tourists and travelers in your region, you need to stand out and make them choose you over your competitors.

Identify what makes your tour unique, design your business around this and communicate it to your potential clients.

Decide how much to charge

Setting the price for your tours is a key step when starting your walking tour business.

You can operate free walking tours and make money from gratuities. But you can also decide to charge for the tours. It’s all up to you.

Find out what other companies are charging and what they offer at those price points. Then, use that as a reference to decide on your price.

Whatever you charge, make sure you offer value and if possible go above and beyond the clients’ expectations so that they can come back for more and refer their friends.

3. Test your walking tour business

At this stage, you are theoretically ready to begin your walking tour business. You have all the information you need and a great tour design.

But is your business really ready to take off? Not quite.

All that you’ve come up with, so far, is more of a hypothesis about your ideal walking tour business. So the one thing missing is a confirmation of whether what you’re offering is what your target clients want.

This is why testing the waters is so necessary.

Try selling the tour to your target customers

Get in touch with a number of your target customers and try selling your tour concept to them. Give as many details concerning the tour to see what areas attract them the most. Also, note the things that triggered little to no positive reaction from the customers.

Adjust based on feedback

Using the feedback you get here, modify your tour design to meet the needs of your target customers better.

Adjust your assumptions and base your decisions on the facts you get from this test run.

4. Define marketing channels

Once you’ve validated your tour business, the next step is to choose your marketing channels.

Decide how your services/products will reach your customers. Check on the channels your target customers mostly use to get information on tours.

Here are some channels you can select to sell your walking tours (you can click on each one to get more info):

• Your website
• Social media e.g Facebook, Instagram, and YouTube
• Online Travel Agencies (OTAs)
• Review sites e.g TripAdvisor
• Destination Management Organizations (DMOs)

Focus on two to three of these so you don’t spread your attention too thin.

5. Prepare marketing collateral and establish an online presence

To promote your brand and make your sales efforts more effective, prepare your marketing materials in advance. This includes any brochures, handouts, business cards and a full description of your walking tour.

Your online presence can easily be established on a website and/or on social media.

Create a website

When you’re just starting out, a business website is one of the best ways customers can learn about your company. You can personalize your website exactly how you want it and bring out your brand’s voice

Having your website beats depending on other online channels. You don’t pay commissions to anyone. You have full control over your site. You can collect your customers’ emails and keep in touch with them for any updates concerning your business.

Just remember to keep things simple and focus on creating a functioning website. Adding all the bells and whistles can come at a later point when you’ve established a solid experience for your customers.

Open social media accounts

The best thing about social media is that it’s free and it gives you access to so many people who are already on the platforms to acquire information.

The most popular platforms are Facebook, Instagram, Pinterest, YouTube, and Twitter.

Regiondo customers can even accept bookings directly on their Facebook page using the Facebook integration feature.

6. Handle the legal stuff

This is the not-so-fancy part of starting a walking tour business – the legal aspect.

To be allowed to trade legally you need to meet the legal requirements. It may seem quite complicated and time-consuming. For this reason, it’s best to handle these processes early.

Register your business name

Your business name will be the legal representation of your business but does not have to be the same name as your tour company. When you choose your business name, confirm that it’s not trademarked or already in use.

Register your name at the local business registrar’s office.

Register for taxes

There are certain local, regional or federal taxes that businesses have to pay as they trade. Ensure you register for these taxes before you start your tours.

Open a business bank account

It’s best to separate your personal finances from your business finances for the sake of order and personal asset protection. To create this separation, open a business bank account where you’ll deposit payments from your tours.

Obtain necessary permits and licenses

Research if there are any permits or licenses you need before giving walking tours in your country or region. Apply for and obtain these documents to avoid fines or even being shut down.

7. Launch your walking tour business

Congratulations on coming this far. You’ve transformed a great idea into an actual business and you are ready for takeoff.

Through the website and social media accounts you created, you probably already landed some bookings for your launch. Use this opportunity to create a memorable first impression.

Don’t worry if things don’t work exactly as you’ve planned them, this is just the beginning. But ensure you do your best to wow your customers.

8. Grow your business

Now that you’re in business, aim to grow.

Never stop listening to your customers. They’ll teach you what you need to know to make your walking tours better and more relevant as you go on. This is part of what will bring about great growth.

Continue promoting your tours in order to create more awareness about your brand and attract more customers.

Conclusion

There you have it. Your guide to starting a walking tour business.

From beginning with in-depth research, designing your tours then testing out what you come up with. Then, after establishing that you’re on the right track, setting up your marketing channels and handling the legal aspects of your business (if you hadn’t already done so).

The final step is launching and growing your walking tour business.

We hope you’ll draw inspiration from this article to start your own walking tour company.

You might also like: 

• How to Start a Tour Company with (Almost) No Money
• How to Conduct Market Research for Tour and Activity Companies
• 4 Questions to Help You Design the Perfect Tour

The post How To Start a Walking Tour Business appeared first on Regiondo.

They are happy with the experience, you are happy with the way you earn a living.

But that’s not how it always pans out.

For example, you can fail in driving awareness for your business. A lack of traffic and calls leads to a lack of sales.

And even if you generate some “buzz”, people might choose a competing offer or bounce off your website.

But let’s say you do a great job of these and people buy your tour. That’s good, right?

Well, even now there’s one more crucial element – you must give them a great experience.

Traffic and sales are worthless if people don’t like your tour. Sometimes, even a few bad reviews can put your business at risk. In addition, bad experiences lead to few referrals and low morale within your company.

And while you may be getting great reviews, there could be ways to streamline, offering more value to your customers and a better profit for your business.

This is what we’re going to explore today – 4 questions to help you design and improve your offers from both a customer and business standpoint.

Ready? Let’s go.

1. What do people say?

The most obvious source of inspiration for improving your offers are existing customer reviews.

Look for patterns or themes that people mention again and again. These could be both positive or negative. Don’t get defensive here – the idea is to learn and improve.

Perhaps people consistently mention the guide and their professional knowledge?

On the other hand, some people might complain about the itinerary or the duration of your tour.

And what if you had a really interesting aspect of your tour that you thought people would love – but no one seems to mention it? If something takes a lot of effort but seems to have no impact, you should consider removing it from your offer.

Once you go over your reviews and feedback, you’ll get a good sense of what’s working and what can be improved.

But this is just one way to collect information. And it can sometimes be subjective as people’s experiences tend to be different. To make it count, you also need the concrete numbers.

2. Which offers bring the most sales?

If you’ve heard of the 80/20 rule, you’ll know most of your sales likely come from a small portion of your offers.

Which ones are they? This will give you an indication of what people find the most appealing among your offers.

That’s a great way to understand what to focus on and improve.

3. Which offers bring the most revenue?

The number of sales is just one measure – but it’s actual revenue that pays the bills.

This is why it’s crucial to segment your offers based on the amount of revenue they bring, especially when you’re selling multiple types of tours.

The revenue per product is a good metric to look at because these offers likely contain the elements people enjoy the most.

4. Which offers bring the most profit?

Lastly, you should take into account your business costs per tour.

Knowing the revenue and cost per tour will give you the profit margin so you know which offers are streamlined from a business standpoint and which ones are barely breaking even.

By this point, you’ll have a good list of ideas to design a tour that contains the most valuable aspects for your customers and remove the elements which create costs an eat up your profits.

What’s next?

Now that you have all that information, it’s time to organize it into 4 buckets: Add, Remove, Keep, Improve.

This will be the basis of a new or improved offer. It should have all the best elements you found based on your reviews, feedback, and quantitative data.

The elements that people don’t like or don’t appreciate should be cut off from the offer to make sure you’re focused on bringing value rather than stuffing your offer with things no one needs.

This will let you streamline the offer from a business perspective.

Conclusion

Your offers are at the core of your business.

If you improve your delivery and overall tour design, you’re likely to improve your cash flow and business exponentially. This will bring you more referrals, better reviews, and more satisfaction from your work.

Even the tours that do well can often be better by using the Add/Remove/Keep/Improve framework.

Use that to your advantage and create the best tour you can so your business runs like clockwork.

You might also like: 

• How to Start a Tour Company with (Almost) No Money
• How to Conduct Market Research for Tour and Activity Companies
• How To Start a Walking Tour Business

The post 4 Questions to Help You Design the Perfect Tour appeared first on Regiondo.

We all know that a tour operator is one who packages key components (or all) of a trip, markets it, sells it to a traveler or tourist, and handles the entire tour operation.

But do you know exactly which type of tour operator you are?

Having clarity on this question will help you identify key partners to work with (like DMOs or hotels) and make better business decisions overall. As a result, you’ll be able to curate better tour packages and run your entire tour operation smoothly, efficiently and successfully.

This is why we’ll cover the different types of tour operators below (plus – we’ve attached a handy infographic at the end for your reference).

So, let’s get to it – which type of tour operator are you?

Types of Tour Operators

There are five main categories of tour operators that you could fall into: inbound tour operators, outbound tour operators, domestic tour operators, receptive tour operators, and ground tour operators. Let’s find out which one of these five you fall into.

Of course any tour operator cannot be fully successful without a booking system that will automate all reservation processes and allow them to generate more revenues. If you still haven’t got a booking system, try Regiondo, the most popular booking system in Europe designed to streamline your booking process. Book a demo with Regiondo experts to learn how your business can leverage booking system.

Inbound Tour Operators (AKA Incoming Tour Operators)

Inbound tour operators bring tourists into a country as a group or via individual tour packages. They handle all arrangements in the host country; and the types of tours they curate are specifically for non-residents touring the country.

Let’s look at an example.

If a group of Italian tourists want to explore Germany, then the tour operator in Germany who handles all the arrangements for the tour is known as an inbound tour operator. So, inbound tour operators are locally based and offer tours that cover their own country.

Most inbound tour operators hire local travel agencies for things like airport pick-up and drop-off; form partnerships with local hotels and businesses; and have key partnerships with other types of tour operators (who help them run tours on the ground).

Outbound Tour Operators

Unlike inbound tour operators, outbound tour operators work within their countries to take travelers to other countries. They are tour operators who market their tours for international destinations, either for business or leisure travel.

Let’s say, for example, that a group of Canadian tourists are planning a trip to Italy. Then the tour company in Canada that handles all the ticket reservations and hotel bookings is the outbound tour operator.

To further simplify things, outbound tour operators design and package tours for tourists in their home country to visit an international destination.

Now, most outbound tour operators choose to specialize in specific destinations: either a destination that is “trending” or one in which they have particular expertise and distribution partners. They often work with other tour and activity providers in the destination when designing their travel packages.

Domestic Tour Operators

Domestic tour operators are those that put together inclusive tour packages and sell them to domestic travelers. In other words, they are tour operators who provide travel packages and tours within a tourist’s native country.

Domestic tours usually involve residents of a specific country traveling within that country. They can visit national parks, scenic areas, hospitality tours, city tours, train tours, etc. Since there are many options that tourists can choose from, domestic tour operators often combine several tourist components into an inclusive package that they can sell to travelers within the boundary of the country.

Domestic tour operators form key partnerships with other tour and activity providers in order to attain a larger share of the domestic tourism market.

Receptive Tour Operators (RTOs)

Receptive Tour Operators (RTOs) provide tourism products to tour operators in other markets (as a business-to-business relationship).

Specifically, RTOs sell tourism products, whether they are sold in a tour package or alone, to tour operators and/or travel agents. They are essentially wholesalers and they don’t sell directly to the public.

So how do they make money?

They add a percentage rate (or fee) to the final price that the tour operator is selling the product or service for. When a travel agent buys the tour product, they incur the RTO’s fee in the final price. In that sense, RTOs do not charge commission. They simply market the tourism product and add their fee to the final product price.

Another key characteristic of RTOs is that they are experts in the region they operate in; and know much more than just the hotels and types of tourism activities that are offered in the region. As such, RTOs to help other tour operators identify things like hotels, services and design itineraries in regions they are not familiar with.

Ground Tour Operators

Ground tour operators operate domestically. They are however different from domestic tour operators in that they organize tours for incoming tourists on behalf of an inbound tour operator (and sometimes, outbound tour operators).

Let’s look at an example to better understand the role they play.

Italy will be the destination in this example. So, here’s how it works:

An inbound tour operator designs and promotes beach holidays, adventure, and heritage tours in different parts of Italy. Problem: the inbound tour operator doesn’t have offices across Italy. The inbound tour operator also doesn’t have close contacts or partnerships with suppliers and key agents in certain parts of the country. So, they consult with ground tour operators.

It is the ground operator that will handle the incoming tourists at those various destinations around Italy. They oversee land arrangements; negotiate with and contract local vendors; coordinate arrivals and departures; plan and put together local tour packages; escort tourists; provide market data; and cost and price tour packages. Overall, it is their duty to ensure that the entire trip goes smoothly based on the package tours and agreements.

You may know ground tour operators as “handling agencies” because they organize tours for incoming tourists on behalf of overseas tour operators.

Wrapping Up

Back to the question we asked at the very beginning: which type of tour operator are you? Now that you’re better informed to answer that question, you can also start thinking about ways to improve your distribution and marketing channels based on that answer.

The next step is to figure out who your key partners are and strike up deals to propel your business forward.

You might also like: 

• How to Start a Tour Company with (Almost) No Money
• How to Conduct Market Research for Tour and Activity Companies
• How To Start a Walking Tour Business
• 4 Questions to Help You Design the Perfect Tour

The post Which Type of Tour Operator are You? appeared first on Regiondo.

Market research is the practice of gathering and analyzing data about your customers. It’s important because it lets you act based on real data rather than assumptions. Market research is a crucial element of business strategy that can save you lots of time and money with just a little bit of effort.

In this article, we’ll examine how to conduct market research in 4 easy steps.

Ready? Let’s go.

How to conduct market research in 4 easy steps

Yes, tour and activity companies can perform market research using traditional methods like SWOT and PEST analyses. While useful, these techniques originate from the 1960s and, well, a lot has changed since then. To bring things up to speed, we’ll borrow some concepts from the technology industry which are applicable to physical businesses too.

Are you planning to start or grow a tour business? Get your free Regiondo trial and create your online ticket store now.

Step 1: Define your hypotheses

In simple terms, the goal of market research is to establish and test your assumptions about your market, customers and competitive landscape. So the first step is to list your hypotheses (your “best guess”) about certain market dynamics.

This could be things like:

• What is your customer profile?
• Who are the major competitors?
• How big is the market?
• How much are people willing to pay for your tour or activity?

To make it easier to list your hypotheses, below are 3 tools that help you map out your assumptions about various aspects of your business.

Tool #1: The Business Model Canvas

The Business Model Canvas is a tool that helps you visualize your entire business in one place. It’s great when conducting market research because it helps you list out your hypotheses on a single sheet of paper so you can test them one by one.

You can list assumptions about your customer segments and the value they derive from your tour or activity. In addition, you can map out things like the types of relationships you want to develop with customers and the channels you can use to reach them.

Download a printable version of the Business Model Canvas and learn more about this tool here.

Tool #2: The Value Proposition Canvas

The Value Proposition Canvas helps you to map out more details about your market and customers. It serves a similar purpose to the Business Model Canvas in that it helps you list your hypotheses in one place. However, it goes into much more detail about your target customers, their pains, gains, and the competitive landscape. It’s especially useful when crafting your products and offers so you can bring more value to your customers.

Download a printable version of the Value Proposition Canvas and learn more about this tool here.

Tool #3: Hubspot’s Buyer Persona Generator

The first step you should take before starting your business or making big changes is to create your buyer personas. The buyer persona is a fictional representation of your ideal customer(s) and their core traits. This could be things like their demographics, buying habits, needs and preferences. For an easy way to create a customer persona, try this tool from Hubspot.

Once you establish a set of assumptions about your market and customers, it’s time to collect real data that proves or disproves them. Remember that your goal is to learn so having a wrong assumption is just as good as having a correct one.

Step 2: Collect data to validate your assumptions

There are generally two types of data you can collect: 1) qualitative and 2) quantitative.

Qualitative data relates to in-depth customer information from things like focus groups and interviews. This often involves speaking to people in person or over the phone to collect detailed information using open-ended questions. As the name suggests, quality is more important than quantity here.

Nowadays, websites like TripAdvisor help you collect user reviews which is a great starting point for your qualitative analysis. In addition, you can approach customers after they’ve tried your tour or activity and ask about their experience. To learn more about collecting qualitative data, check out this article.

On the other hand, quantitative data is focused on gathering more basic information from a large set of customers. Surveys are the most common way to collect such information as they are (usually) quick and easy to fill out. Check out Typeform if you want to create surveys that are beautiful and not annoying.

You can also rely on secondary sources of statistics related to your business such as Statista or Skift. To learn more about collecting quantitative data, check out this article from the British Library.

It’s important to use both qualitative and quantitative data when making decisions to get a better perspective on the issue you’re exploring.

Step 3: Analyze information

Once you’re happy with the amount of data you have, it’s time to structure it in a useful way. Simply going over what you’ve collected will give you huge insight into your customers and market. However, structuring it in a logical way can provide extra knowledge for you and your whole team.

This is where you will conclude if your hypothesis is right or wrong, for each assumption you’ve made. Here’s how to perform a simple statistical analysis and here’s how to analyze qualitative data.

Next, it’s time to act on the new information.

Step 4: Summarize, report, and act

Ideally, you will summarize your findings in a short document that’s easy to read and readily available. If you have a bigger team, it’s useful to distribute your findings to the relevant people so everyone is aligned and knows what to do based on the market research. If you need a good way to structure your findings, try out Google Data Studio.

Here’s an example to bring it all together

Let’s say you want to grow sales and you’re already working to full capacity on most days. You decide to test a higher price point and believe people are willing to pay 45€ per person instead of the current 35€.

To test your assumption, you can go to Expedia Local Expert and other top online travel agencies where you can see how much competitors are charging for the same or similar product. You can also find reviews on platforms like TripAdvisor to gather qualitative information about customers and how they feel about the price of similar products.

After collecting information about 15-30 competitors in similar markets, you see that the average price they charge is 32€ per person. You also find that customers often complain about the price in their online reviews. Therefore, increasing the price is not likely to be a favorable move unless you add more value to the existing offer.

This could lead to a new hypothesis such as “If I increase the duration, I can charge a higher price and increase my revenue”. Now it’s time to test this assumption and see if it holds out with real data.

While this is a basic example, it shows you the dynamics of the whole process. In just a few minutes, you can find a lot of data and make decisions with confidence. The experiment you design will depend on the hypothesis you test and the available information. The goal is to act based on concrete data instead of guesses.

Conclusion

Market research is the systematic collection and analysis of information about your customers and market. It’s important because it can save you a lot of time, effort and money creating something nobody wants or needs.

For conducting successful market research, you can borrow new techniques from the tech world and rapidly test your ideas and assumptions. Tools like the Business Model Canvas can help you visualize your hypotheses and test them one by one.

Your data collection method will depend on your exact business situation. Ideally, you should aim to get both quantitative and qualitative data to understand the big picture before making a decision.

To make the best use of the information, it’s important to structure it in a logical way and summarize it for yourself and your team. This way, you are more likely to act on it and derive the benefits from this new knowledge.

You might also like:

• How to Start a Tour Company With (Almost) No Money
  
• 9 Ways to Get Business Funding for Tours and Activities
• How to Set Up an Online Store for Your Leisure Business
• The Best Content Management Systems For Tour And Activity Operators

The post How to Conduct Market Research for Tour and Activity Companies appeared first on Regiondo.

The truth is that being a tour operator is not just about providing new and exciting experiences for tourists. There’s way more to it than that. Just like any other venture, there are lots of pieces that need to come together before you achieve any kind of success.

A major part of that puzzle is putting together a well thought out business model and plan.

That’s why you’re reading this article. It is your guide to understanding the tour operator business model and how to create your own. It will also help you to focus on tasks that will have the most business impact.

Let’s get to it!

The 3 elements to form a successful tour operator business model

The tour operator business model consists of three key elements: your tour and activity selection, your market, and your money making plan.

Tour and activity selection: What are you selling? What makes it unique/what’s your unique selling proposition (USP)? What resources do you need to get started?

Your market: Who are you selling your products or services to? Which category of traveler/tourist are your services for? Who are your competitors?

Money making plan: How will you make money? How will you market your trips and activities?

Addressing those three main points in a document or spreadsheet is the first step to creating a viable tour operator business model.

Next? Set goals.

Setting goals and objectives for your tour operator company

This part is extremely important in several ways. The first one being that envisioning how your business will look 5 years down the line gives you some more perspective of what you need to do to get there.

So think about what it will look like. How many customers will book your tour per week? How many activities can you handle per week?

Answer questions of that nature and you’ll be able to come up with at least 10 objectives and steps that you need to take to get there.

Some examples of goals and steps you may come up with:

• Expand your tour activity selection. In order to do so, you need to find gaps in the market that you can meet with your resources and experience.
• Reach a new market segment. That requires that you perhaps partner with other travel agents and activity providers.
• Further streamline your booking experience. That requires that you activate online bookings with tools like Regiondo.

Setting clear, well-defined goals can also help your business grow; and improve teamwork and collaboration (when everyone on your team understands the direction your business is headed, they’ll have more clarity and purpose in their work to get you there.)

And remember that setting goals is an ongoing process in any business.

The Value Proposition: Why would anyone buy your tour?

Your business’ value proposition is arguably the most important element of your overall marketing message. It is the part where you define how you’re creating value for your prospective customers.

To be a bit more technical: Your value proposition is a clear and concise articulation of why customers should choose your tours or activities over your competitors.

So what goes into creating a clear and concise value proposition?

• State your vision for the business
• What value does your product or service provide to the customer?
• Why are you qualified to offer that value offering?
• What is unique about your product or service?
• What is the growth potential for your product or service?

The aim of writing down your value proposition is that it makes it easier for customers and potential investors to evaluate your offering — from a market and financial perspective. In fact, every single item on your business model or plan has to relate back to your value proposition.

Key resources you’ll need to deliver your USP

What do we mean by that? Simply put, your key resources are the main resources your company uses to create your USP and to provide your tour or activity offerings. They are the most important things to have for your tour operator business model to work.

Credit: Strategyzer

So think about a few things:

• What are the main assets your company needs to put on tours and activities?
• What key resources does your tour require?
• Which resources are most important in all your distribution channels?
• What does the operational end of your business look like? For example, what kinds of materials do you need? What equipment will you need? What types of people will you employ?

The key resources section plays a vital role in bringing your vision and value proposition to life. It highlights what you need in order to deliver the value your customers expect from you.

Sorting out your finances

You’re really excited to get your new business model up and running— we get it. But remember that a successful tour operator business needs to make economic sense.

So, you need to ask yourself some financial questions, which include:

• What’s the initial investment of capital that my tour operation company will need?
• When will I start making profit?
• What will my profit statements look like in 6 months? A year?
• What income can I take home?
• Will I be able to dedicate enough, finance-wise?
• What is the likelihood of the business failing?
• What if it does (fail)?

Those questions are vital to accurately gauging your ability to develop a successful tour operator business model.

Establishing your revenue streams

Perhaps the most critical component of any sustainable tour operator business model? A positive cash-flow.

You need to figure out your revenue streams from the get-go. To help you fine-tune them, here are some questions you should ask yourself:

• What are your primary and secondary revenue streams?
• What value are your customers willing to pay for?
• How would they prefer to pay?
• How much does every revenue stream add to overall revenues?

Defining your customer relationships

Customer relationships refer to the way you interact with new and existing customer segments. Once you know their communication and purchasing preferences, you can adequately build a system to attract customers, get repeat business and more referrals.

Here are some key questions to think about when mapping out your customer relationships:

• What does your target audience expect from you?
• Can you integrate that into your business (cost and format-wise)?

Those two questions will further inform your USP, finances, and other strategies.

Pulling everything together into your marketing strategy

You need a marketing strategy that is solely designed for your target market and customers. There are so many niches in the tour operator industry which also means that there are so many different marketing plans that are particularly favorable to specific niches.

You need to create a marketing plan that is tailored to your niche.

So, ponder the following:

• What is my customer persona? Meaning, who are they? How old are they? What do they do for a living? Where are they from? What do they want from your tour or activity?
• Where do you find your ideal customer? For example, are they heavy social media users? If so, which channels are they active on?
• What are their purchasing personas? Meaning, is it a segment that purchases online? Do they prefer sending through a check or buying in person?

You can then do your research to create an effective marketing strategy that your customer segments will buy into.

Let’s give you potential strategies you can incorporate into your overall marketing strategy:

• Add a blog to your website to substantially boost your search engine optimization (SEO) efforts.
• Cultivate your social media presence.
• Run campaigns that make sense for your customer segment. For example, if your target market is millennials looking for the ultimate holiday experience, then social media should be your priority over print advertising.

Wrapping up

Building a tour operator business from scratch is not easy. There are many pieces of the puzzle you have to put together: from choosing your niche, to building relationships, to conducting thorough market research, to building your brand and online presence, etc.

However, creating the right business model will give you a clear roadmap to guide your business journey. Use this article as a guide to creating a viable tour operator business model.

You might also like: 

• How to Start a Tour Company with (Almost) No Money
• How to Conduct Market Research for Tour and Activity Companies
• How To Start a Walking Tour Business
• 4 Questions to Help You Design the Perfect Tour

The post How to Develop a Successful Tour Operator Business Model appeared first on Regiondo.

There are many steps involved and it’s important to sequence them in the right order. Otherwise, you risk losing money and time working on the wrong things.

To make it easier, we created this article to guide you through the process of starting a tour company.

Among other things, you’ll find what are the crucial first steps to get a tour business off the ground. You’ll find ways to test your ideas without spending lots of money up front and get early sales before you even launch your business.

You’ll also find tips for designing your tour and positioning yourself in the market so that you have a clear differentiator from existing competitors.

Lastly, you’ll gain an understanding of how to market and grow your tour company so that you have a solid basis for success.

Ready? Let’s go.

This is a long post. Get a PDF version by clicking on the image below so you can save it for review later.

Before you start (The Groundwork)

Before going further, you need the most important ingredients for starting a tour company – skills and passion.

Just kidding.

You really don’t need skills and passion at the beginning because you can acquire these as you go along.

But you do need to make a commitment.

Make a commitment to yourself

Starting a tour business is like everything else in life that’s worth pursuing – you’ll get out of it whatever you put in it. So it’s best to approach the whole venture with a long-term mindset. It’s hard to get started and it won’t get easier over time. Before even starting, make sure you’re truly committed to spending days, months and years on growing this venture.

Now, on to the more practical stuff.

Check the requirements

The first thing you’ll want to do is check the requirements with your local tour body. There may be specific health and safety regulations, depending on your city and the type of tour you want to start. For the most part, these should be relatively easy to fulfill but in some cases, you might have to take a special course to start trading legally.

If you find that it takes time to obtain the necessary documents, skip to the part about registering your business and take care of that first. This way, you can do all the work around designing your tour while waiting for the registration documents.

Designing your tour

So now you’ve made a commitment that you’re in it for the long run.

You’ve also checked the regulations with your local tourism body and you have a good idea of what’s to come from a legal standpoint.

That’s all you need to go forward and design your tour – including how you will make money and stand out from the competition.

Choose your target market

If you’re sure you can meet all requirements of starting a tour company and you’re in it for the long run, it’s time to do a little market research.

The most important thing to do at the beginning is to choose your market and niche down. That’s because you likely have limited resources and you don’t want to waste them on activities that won’t get your results. To get results, you need to know who you’re targeting, what your potential customers need, and how they acquire information.

So how do you choose your niche?

There are many ways to go about this and below are just a few best practices:

1) Scratching your own itch
A tried and tested method is to build a tour for people like yourself. This means people that are in your age group, share your interests and, ideally, you know a lot of them.

Taking this approach is great because it will be easier for you to “get in the shoes” of your customers.

2) Take advantage of a market trend
Is there a factor that makes targeting one group a really good idea?

Perhaps a new law reduced travel restrictions for another nation and you expect many people will come and visit?

Or maybe there’s a new initiative in your city that’s likely to attract many new visitors?

It’s important to stay on top of local and international tourism trends because you might spot a pattern before everyone else and take advantage of it.

3) Look at your competition
Is there a gap in the market that you’ve spotted? Something that’s missing in the region for you personally, that you’d like to introduce? Check out Viator or GetYourGuide to make sure it’s really missing.

If you’re lucky, all 3 factors above will work in your favor. You should ideally be in a growing market that you understand and is underserved by existing competitors.

Develop your Value Proposition

Once you’ve chosen a target market, it’s time to figure out what type of tour you’re going to sell them and why they will buy it.

How do you go about that?

A good approach is to list out your ideal customer’s pains and gains.

How can you help them solve their problems or reach their goals with your tour? Answer this question to figure out what type of tour you can offer and how to tailor it for your customers.

For more information on developing an effective value proposition, check out our article on how to conduct market research for tours and activities.

Identify your Unique Selling Point (USP)

The USP or Unique Selling Point is the answer to the following question: why would anyone choose you over competitors?

Getting your USP right is important because you’ll need to communicate it often and everywhere you can.

Is your tour the only one of its sort in your city? Are you giving more value at the same price? Increasing the duration (though not always), giving out freebies or adding a tour theme are all good examples of differentiation.

Devise a go-to-market strategy

So you know who you’re going to target and what you’re going to offer them. Now it’s time to think about how you’re going to reach your audience in a cost-effective way.

Below are some of the best channels for selling tours (you can click on each to read more):

• Your website
• Online Travel Agencies (OTAs)
• Social Media (Facebook, Instagram, Pinterest, YouTube…)
• Destination Management Organizations (DMOs)
• Review sites like TripAdvisor

We’ll speak more about these channels later. For now, think about how your target audience acquires information so you have a rough idea of how you’re going to reach them.

Set your price

Pricing is a tough subject to master.

But it’s important to get it right because it directly affects your revenue, the perceived value of your tour and, most importantly, the type of customers you attract.

The most important thing is to avoid underpricing. Just because you’re starting out doesn’t mean you should be lower cost. If you compete on price, it’s going to be hard to get the initial profit you need to grow and provide a better service.

Think about it this way – the higher the price, the more value you can provide to your customers.

In fact, you can have several tiers of pricing to control demand and allow people different types of experiences.

That said, it’s worth checking out competitors so you have a rough guideline of the average price others are charging.

Identify the resources you’ll need

Now it’s time to think about what you’ll need in order to deliver your tour.

It’s good to have an idea of the required resources so you can estimate your costs and avoid unexpected surprises.

These could be things like special equipment, assets, and employees. Or maybe you need to find a great office location?

Whatever it is, keep that in mind so you can budget for it later.

Visualize a day running the tour

By now you should have a good idea of how your tour is going to function.

In order to clarify what it means to do this, try and visualize a normal day running the tour.

• When do you wake up?
• What do you do first in the morning?
• How does your workday go by?
• How does it end?

Visualizing your day will help you spot any gaps or things you’ve missed. You’ll also get a rough idea of the more repetitive and mundane tasks you’ll have to do – hopefully, this will not put you off!

Make a list of people who can help you

We’ve covered some ground now and you’re probably thinking “that’s a lot of work”!

And it is.

Once you have a rough idea of what you’ll need and the ongoing activities, think about who can help you with starting and running the tour.

Do you know people who can provide you with any resources, guidance or support? Or maybe there are specific organizations that you can partner with or even pay to massively increase your chances of success?

Think about this early and you’re likely to find that things are much more realistic than you thought at the beginning.

Estimate your costs

As with any business, you also need to keep an eye on the costs.

After putting in the work in the thought exercises above, you should be able to estimate some rough number – both a monthly overhead and the cost of starting up. Try and make a few notes right now.

Ready?

Now double the number you got for both the upfront and monthly costs.

The reason for this is to avoid “optimism bias” – we are wired to underestimate the likelihood of things going wrong in the future.

So stay on the safe side and, as they say, “expect the unexpected”.

Testing the waters

Source: TNW

Most articles online will suggest you register a company, find an accountant, build a content-heavy website and all sorts of useless things – before even knowing if people want your tour.

Here, we take a slightly different approach.

While you need to get the formalities right (like your license, registration, and insurance – but more on this later), you should try and collect as much information as possible to validate your assumptions before spending lots of time, effort and money.

Here, we’ll look at the first steps you can take to prepare your tour for success and get online as quickly and cheaply as possible.

Choose a name for your tour

This should embody your core differentiator and make clear what you do. Here are a few good examples:

• Seaplane Adventures
• BrewCycle Portland*
• Boston Lobster Tours

All 3 examples give you an idea of what to expect – but they are not obvious.

This is also a good time to check if there’s a suitable domain name for your business – later on, you’ll need it for your website. Plug your ideas into this domain name generator to get some killer suggestions.

*Please note: We don’t support drinking craft beer before getting on your bicycle.

Create a logo

Ok, so you have an idea of your tour design, pricing, and USP. Now it’s time to get to the visuals.

The first thing to think about is a basic logo to use across various sales channels – like your website and social media.

You can create a free logo here or hire someone to do it for you on places like 99designs.

Try to get the colors right and make it represent what you stand for. But don’t worry too much about it – the logo is important but not the main reason people will come and buy from you.

Take some photos and videos

Source: GofreeDownload

Yes, I know you still haven’t launched your tour and don’t have any photos of happy people with stunning views behind them.

But that’s no reason to exclude visuals from your marketing materials.

Go around and take some photos in your city. Or record a video of the equipment you’ll use – even before you have it. This will come in handy when you start building your online presence (we’re getting there).

Decide on your opening hours and launch date

What? Opening hours?

Yes, you’ll need to present a fully operational page in a moment that assures people the tour will go live.

This is also the time to decide on your official launch date so you can start generating some buzz ahead of that.

Make sure to stay on the safe side and expect that there will be delays. There’s no need to rush (unless you have a really good reason for it).

As a rule of thumb, give yourself at least 30 days for promotion ahead of the launch date.

Set up your contact details

You’re about to start interacting with a lot of people – now’s the time to set up your business contact number and email address.

No need to use a website domain name for your email or setting up a long-term contract for a mobile phone. People don’t really care about that.

A simple [your_tour_name]@email.com and a prepaid SIM card should be enough at this point.

Create a Facebook page

Source: Sprout Social

You were probably wondering why you need to do all these stuff above.

Well, the reason is your Facebook page (or in rare situations – some other social media where your target audience hangs out).

A Facebook page is one of the fastest ways to get online and gain the capacity to reach many people.

It can host all the information people care about when booking your tour – including pricing, address, reviews and so on. They can even get in touch with you directly via chat.

Best of all, your friends and family can share it and generate awareness.

There’s only one setback – you need a way to capture people’s email addresses to tell them about your launch date. That’s where your website comes in.

Create a basic website

Your website should be the primary online channel you use for acquiring new customers. The reason is you have full control over your website which is not always true when using other online channels. You can control things like the branding and messaging, but more importantly – you will not pay any commission fees to resellers.

At this point, you don’t need an elaborate website with all the bells and whistles. You just need a simple page with the following elements:

Attention:
Create an exciting headline that captivates your visitors once they arrive at your website.

Interest:
Describe the key benefit of your tour, making sure to mention who it’s best suited for.

Desire:
Highlight the best parts of your tour using both words and images to instill a desire to act in your visitors.

Action:
Provide a clear call to action to submit an email address so you can save them a spot for launch date (or directly purchase your tour or activity once you have a booking system in place).

Like with the logo, avoid spending too much time on this and make sure it’s just out there. There are many cheap options for building a basic website such as WordPress or Drupal.

You can learn how to build your own website with built-in booking system here.

Once you set up your website, take a minute to check its performance in terms of SEO, page speed and keywords. You can use this free SEO grader tool to perform the test.

Networking

So, you’re officially online and well on your way to launching a tour business. Now it’s time to get involved in the industry and talk to the most relevant people you can find.

Talk to people in the industry

Talking to tour guides and operators that have done what you want to do is probably the fastest way to a successful start. Ask for advice, ask for their stories and learn from their successes and failures.

Just search for tours that don’t directly compete with you and get in touch with one or more of the tour guides. Explain that you’re just starting out and that you want to meet other people in the field to bounce ideas and experience off each other.

Follow the influencers

There are many influencers in the tour industry that you can turn to.

Even if you can’t directly talk to them, you can follow their blogs and social channels to stay in touch with what’s going on in the tour industry.

Of course, keep a close eye on the Regiondo blog too – we cover the most important aspects of starting and running a leisure business with topics ranging from sales and marketing to leadership and important tourism events.

Get involved in events and meetups

Source: Local Guides Connect

Another easy way to develop the network you need is to join existing events, conferences and regular meetups near you. These should be related to the industry but don’t necessarily have to be just for tours.

A lot of groups exist where business owners can share ideas and experience to get more profitable and grow. These are also people that can refer you more business and, of course, buy from you.

Just go to Meetup.com or your local DMO too see if there are any good events happening nearby.

Stay active in these fields and you’re bound to get a lot of benefits and have fun along the way – while meeting new people and acquiring friends.

Taking care of the legal stuff

As you can see, your goal when starting out should be to generate bookings as quickly as possible.

However, there are a few things to take care of so you can trade legally. It’s best to do this early to avoid potential bottlenecks later down the road.

Register your business

The first thing you need to do is to register your business name so you can legally start making sales. The name doesn’t have to be the same as your tour name so you can use whatever makes sense for your business structure and future plans.

Just go to your local business registrar office or call them up on the phone to save time (if available).

Open a business bank account

There are many ways to get paid, but you always need a place where the money ultimate goes. So opening a business account is one of the first things you need to do. This will let you keep track of expenses while having a place to take payments.

Get a tour operator license

Once your business is officially registered, it’s time to obtain your tour operator license or (or equivalent in your country). The process for this should be detailed in your local government’s or tourism body website.

Set up liability insurance

Liability insurance will protect you in case something goes wrong and a guest or employee has an accident. You can also cover any potential legal costs. Make sure to go online and search for quotes from local insurance companies.

Open for business

Well, not exactly. While your business is not fully operational yet, there’s no reason why you’d turn down bookings.

In fact, you have every reason to start getting pre-sales and booking your tour in advance. Not only is this the best way to validate your ideas, but it’s also great to fund your startup costs for launch day.

Start taking online bookings

Ok, now that your website is up and running, you’ll need a way to get bookings through it.

To do that, we recommend choosing a booking software like Regiondo that will take care of the hard work for you. You can  book a live demo with Regiondo experts who will guide you through the platform and help you start getting online bookings.

Once you have your website and booking system implemented, you can manage all your sales in one place using your Regiondo dashboard.

Your website visitors can also see a live booking calendar on your website and you’ll be able to manage multiple sales channels – like Viator and GetYourGuide among others.

Register with Online Travel Agencies (OTAs)

Once you’re ready to take bookings, online travel agencies can be the best place for getting early sales. These sites have grown tremendously in recent years. They often list thousands of tours and activities and sell them to their visitors in exchange for a commission.

You can learn more about the top online travel agencies in our dedicated post on the topic.

Get on review platforms

Eventually, reviews will be a key part of your tour business and it’s never too early to start thinking about building your presence on review platforms.

The biggest name here is TripAdvisor so we have a whole article on building your TripAdvisor ranking.

As a best practice, try to build your reviews in a single platform, preferably TripAdvisor, so that you don’t spread your attention across multiple platforms. But there are other important places too – like Google, Yelp, and Facebook. If people prefer to use these platforms, you should give them a way to leave a review there as well.

Sign up for the relevant social media platforms

Hopefully, you already have some social media presence, such as a Facebook page.

But depending on who you target, you might also look into other channels.

For example, younger people tend to spend more time on Instagram and Snapchat.

And Pinterest is one of the most visual places to hang around on the web – ideal to post the photos you’ve taken in the steps above.

YouTube is the king of video – and it’s a great channel for many people to drive traffic to their website.

Twitter can be a good option too – especially if your target market hangs around there. Twitter’s users are from a varying background but you will often find influencers there – who can help you grow your business tremendously.

Finally, despite its status as a professional network, Linkedin can be a good channel for selling to businesses. If you plan to introduce teambuilding offers and group events for companies, this social network can be a good option.

Tell your story

Now it’s time to add a more personal touch to the places where you have a presence.

Like the USP, your story will do much of the selling for you.

• Why did you decide to start this tour?
• How did you come up with the idea?
• What problems did you encounter?
• Who was there to help you?

These are just some questions that help you define your brand story.

You may think that there’s nothing special to your tour – but I encourage you to sit down and think deeply about this.

Were you fed up with your 9-5 job? Or maybe you’ve always been fascinated with the subject of your tour? Did you grow up in the city, knowing all of its ins and outs? Or maybe you stumbled upon the location and fell in love with it?

Whatever the background, you surely have a good reason to be where you are. If you get to a point where you actually launch a tour, you will have something interesting to say about it. And people like interesting stuff. It’s why they buy tours and activities. And it’s why young people today prefer spending on experiences rather than things.

Do email marketing

Source: Depositphotos

Hopefully, your website is working well and generating a consistent flow of emails by now.

Email marketing is one of the best ways to reduce reliance on first-time customers.

It’s also a great way to generate more online reviews by contacting people after an event.

At this early stage, email will help you update customers and potential customers when the tour becomes available.

Advertise (if you can afford it)

Advertising is not crucial before launching but could help if you have the budget for it.

Depending on your target market, you could go for offline advertising or online advertising. And in some cases – both.

You might be tempted to go for modern approaches like Facebook ads or Google ads, however, traditional print media can also be a good choice.

As more people get their news and info online, you can strike some pretty good deals with local magazines or newspapers.

Another option is sponsoring travel bloggers and other influencers who can promote your upcoming tour in their content.

And if you don’t want to spend cash on advertising, check out our post with 10 ways to get free advertising for tours and activities.

Set up analytics

To be frank, sophisticated stats are not what you want to spend your time on so early.

However, it’s good to have a basic idea of where bookings are coming from (and hopefully you’ll get enough bookings to justify it).

Knowing this will guide you about where you should spend time later on when growing your tour.

Is your website working well? What about Facebook? And maybe some of the OTAs are kicking in…

These are things you need to keep an eye on so you spend your time in the most effective way.

The important thing right now is to keep things simple.

Track a few KPIs and make sure you always have a specific question you want to answer before getting buried in data.

You can learn more about this topic in our post about Google analytics.

Do a test run

If you can, get some friends together and run the tour with them. This will help you spot potential bottlenecks ahead of launch day so you are prepared to tackle them.

You will also be able to make any changes to the tour based on your guest’s reactions and feedback.

In case you can’t do everything yourself

In some cases, you might need staff or special equipment to start operations. This section is here for a reason – you will ideally confirm all your ideas and make sure there is high demand for your tour before investing serious resources.

But if needed, here are some tips on finding the right suppliers and hiring your first employees.

Find suppliers (and possibly funding)

Do you need some special equipment? Any assets that are crucial to the operation?

There are 2 aspects here – one is sourcing them and the other is getting the money to fund your purchases.

But this is a post about starting a tour company on a tight budget. If you don’t have all the cash upfront, check out our article on business funding so you can take care of this too.

For supplying the assets, it’s usually best to source locally.

You may be tempted to order from China or other places where you can get a cheaper offer.

But this way you increase the likelihood of problems and complications.

Despite major platforms like Alibaba that make it easier to trade wholesale, it can still be difficult to acquire assets this way, especially if you don’t speak the language.

It’s also much more difficult to get support later.

And in many cases, you will be surprised that there is not that big of a difference between wholesale prices. So sourcing local is a good step if you can afford it.

Another tip here is to start small.

Avoid ordering big batches but rather start with the minimum needed to make your tour a reality. Try and get it on credit and form a deal where it’s possible for you to return the equipment if you don’t manage to take off as quickly as you’d hoped for.

Hire staff

It’s good to do the job yourself first – at least for a little while. This will help you understand the processes and the type of people you need to hire.

But sometimes, you will need to hire from the get-go.

Needless to say, you should aim to get the best people you can. Whether it’s seasoned professionals or people with lots of potential whom you can train.

This is not the place for making compromises. Who you hire will have a great impact on your success or failure.

This is obviously a big topic and there’s no way to capture it here. If there’s one thing to take away, it’s this:

Find great people and treat them well – that’s one good recipe if you need staff early on.

Launching and beyond

Source: Pexels

The day you and the entire city have been waiting for…

Make it special

Ok, so you’ve designed and tested a great tour, people know about you and you’re confident things will go right. Or maybe you’re not – it doesn’t matter because it’s time to launch officially!

Get everyone you can – family, friends, family friends, friends of friends, the media – everyone should know about it.

If you used all of the tactics above, you might find that you’re booked well in advance!

Provide world-class customer service

Once you start getting some customers, make sure you treat them well. That’s the most important thing from now on – creating passionate, happy customers and treating the people around you well.

By giving people great service, you reduce the reliance on first-time visits and so you can build a sustainable business where you don’t have to grind all the time.

Sure, the odd bad review will come along, but there are good ways to deal with negative reviews.

The important thing is to be willing to sacrifice the short-term for the long run. You may have to swallow some pride and give a few refunds at first. You may have to sell some promotions that are not perfect revenue-wise. But it will pay off because people will spread the word and come back again and again.

Start managing for growth

Well, you’re hopefully in a pretty good spot right now. But the hard work has just started.

You will face many difficult choices from now on – bad economy, good economy, expanding and reducing sales. Plan and research every step carefully – but don’t overthink it. It’s a tough balance to accomplish.

Use your vision as a guide and you will make decisions easier. Go back to your brand story and the reason why you’re staring. Keep this in mind and use it when you have to make a hard decision.

Whatever happens, make sure you have fun and stay true to your vision.

Conclusion

Well, that’s one huge topic, isn’t it? Of course, there’s no way to capture everything you need to know in one article. It could well be a subject of a book or even many books.

But we hope this article will act as both a handbook and an inspiration for you to act and start your tour company.

The crucial things to remember are as follows:

• Do your research
• Test the waters so you don’t spend cash up front
• Start marketing early
• Analyze the best channels for you
• Start small and don’t buy expensive resources
• Hire after you’ve done the job yourself
• Expand carefully, staying true to yourself and your values

So there you have it – that’s how to start a tour company without breaking the bank.

This is a long post. Get a PDF version by clicking on the image below so you can save it for review later.

If you want to learn more about the topic, check out these articles:

• How to Conduct Market Research for Tour and Activity Companies
• 9 Ways to Get Business Funding for Tours and Activities
• How to Sell Tours and Activities with Facebook
• The Top Online Travel Agencies for Selling Tours and Activities

The post How to Start a Tour Company with (Almost) No Money appeared first on Regiondo.

When talking about business funding, it’s not just about EU programs and government schemes. There are multiple ways to finance your business and some will be better than others, depending on your circumstances.

In this post, we’ll present nine different options for funding your business. This way, we hope you’ll be able to choose the right source of funding for your situation and get a good overview of the alternatives you have.

Ready? Let’s go.

The main sources of business funding

There are several main ways to acquire business funding – whether you’re just starting out or you’ve been in business for a while. These range from traditional bank loans to modern methods like peer-to-peer lending.

1. Pre-sales

The best way to fund your company is usually revenue. With pre-sales, you get all or part of a payment up-front, meaning you can use that revenue to acquire the resources you need to provide your tour or experience.

The most common example of a pre-sale is when customers buy products online. The same goes for booking tours and activities in advance of the delivery date. Effectively, you’re getting the revenue first so you have some time to utilize it.

If you’re just starting out or expanding with a new experience, consider creating some buzz ahead of the launch date. For example, this Harry Potter-themed escape room was fully booked for months ahead long before its official launch date.

It should be noted that pre-sales work best when you need relatively small amounts of cash. For bigger sums, you can turn to other funding sources.

2. Grants

Where pre-sales aren’t enough, grants can help you secure bigger amounts of cash. Grants are essentially money given to you for a specific purpose, such as developing the tourism sector in a given region.

As such, you don’t need to pay the money back (unless you misuse the grant). In most cases, grants are provided by the government or local authority.

Grants may sound too good to be true, so you might ask “where’s the catch”?

To start off, the competition for grants is usually high. This means you will have to provide a better plan and showcase more potential than other companies applying for the same business funding.

In addition, there are often specific requirements in terms of how to spend the funding and what type of businesses can apply. So the supply of grants is limited by their purpose and you can apply only for the ones that you’re eligible for.

Finally, grants often co-finance projects, meaning that you have to provide some part of the funding using other sources.

As the saying goes: “There ain’t no such thing as a free lunch”. To acquire a grant, you will need to put in the time and effort required. This involves researching the right options in your region and preparing great applications that stand out from your competition.

If you’re based in the EU and want to learn more about grants, check out this guide on EU funding for the tourism sector.

3. Buying assets on credit

If you need business funding for buying assets and equipment, then you can arrange for later payment with your suppliers. This will give you extra time to generate revenue and use it to pay for the new purchases.

If you have a good relationship with your suppliers already, you can try and negotiate a favorable time frame, often up to 90 days from the purchase date. However, if you’re just starting out, it might be hard for you to buy assets on credit, especially when dealing with established and reputable suppliers – which you should do.

4. Friends and family

If you’re confident about your business model, you might also turn to friends and family for initial support.

While it could feel uncomfortable, you may find that people are happy to get involved and lend you some money. It’s exciting to back new projects and most importantly – they probably trust you.

Needless to say, adding money to your relationships may add some pressure – so you need to choose the people you approach wisely. It might be a good idea to offer them to partner with you and get a part of the business. But if you’d like to keep full control, you can try and arrange an interest-free loan from someone close to you.

4. Banks

Bank loans are often the first source people think about when it comes to business funding. And yes, they are still a viable option, especially in good economic conditions.

If you’re eligible for a bank loan and you can’t source enough funding using one of the methods above, then turning to banks may be a good next step.

Bank loans are more readily available but come with extra costs like fees and interest. If you’re new in business, it will be hard to get a loan. But if you’ve been trading for a while (normally at least 3 years) and you have good financial metrics, you might get a good deal.

5. Angel investors

If there’s no way to acquire enough business funding using upfront payments, grants, or loans, then you can turn to equity financing through angel investors.

Angel investors can back you with both cash and expertise in exchange for a share in the business. There are both good sides and bad sides to this arrangement.

The good part is that you’re likely to secure the funding you need while getting an experienced business person to advise you.

The bad part is that you’ll need to give up part of your ownership and control over the company. Also, angel investor money might not be enough if you need lots of business funding. In Europe, the typical angel investment will not exceed 50,000€ so you might have to turn to other sources if you require bigger amounts.

6. Venture capital

Venture capital firms make bigger investments – usually at least 500,000€ to 1,000,000€. They are a logical next step if you need considerable business funding and your company is in overall good shape.

The downside is that VCs typically require a substantial part of your business and decision making power. They also look for companies with high-growth potential, meaning that you need a strong selling point to stand a chance of acquiring such funding. 

7. Alternative finance

Alternative finance relates to funding methods outside the traditional financial system (e.g. bank loans). They often involve small contributions from multiple investors (sometimes hundreds or thousands) instead of few but large contributions.

For example, approaches like peer-to-peer lending have grown a lot in recent years and there are many platforms that let individuals contribute to businesses through debt financing.

This means you can tap the crowd and get access to a new and growing capital market – and it’s all done online. The platforms which facilitate peer-to-peer lending usually take care of the legal aspects and due diligence.

Depending on where you live, there will be several types of funding you can acquire. If getting a loan or selling shares is not available, then you’ll probably have access to 2 other types of funding: donation and reward-based.

Donation funding is normally applicable to community projects and charities. However, reward-based funding is often a viable option – it lets you create rewards that people receive in the future in exchange for their contributions. Rewards can be things like merchandise or even early bird tickets to your tour or activity.

While not available to everyone, this type of funding can be a great alternative to more traditional methods of financing.

To learn more, you can check out this article with the top European peer-to-peer lending platforms.

8. Side project

In some cases, you can finance your tour or activity through a side venture. This can be totally unrelated or it could be a complementary product/service.

The most famous example of this type of funding is Airbnb. The founders financed their initial idea by selling politically-themed breakfast cereal.

This unusual side venture earned them over $40,000 so they could finance their activities in the early days of Airbnb.

So perhaps there’s something you can easily do on the side that lets you start or expand your business?

9. Joint venture

Another interesting way to get financing is by forming a joint venture with another business.

Joint ventures are partnerships between companies that establish a new entity, often to work on a mutually beneficial project. The idea behind joint ventures is achieving synergy and utilizing each business’ resources better.

So if you have contacts in adjacent industries, you can try and “join forces” to provide a better service together. This way, you can make use of your complementary resources instead of searching for other types of business funding. 

Perhaps a potential partner can provide you with premises and you can acquire the rest of the assets? Or maybe you have all the necessary equipment but need working capital?

Whatever the situation, you will often find that partnering with a business from an adjacent industry can be helpful.

Bonus tip: Minimize risk

The business funding methods above can help you acquire the resources you need to start or expand your company. But we should also note what to avoid. 

Amassing credit card debt or risking your private property is almost always a bad idea. You should approach business funding with care and ideally consult with a professional whom you know and trust. 

Conclusion

While not essential, business funding can be important for starting and growing your tour or activity. 

There are multiple ways to acquire business funding, but some options are better than others in the light of your specific situation.

When possible, you should always aim to finance your company with customer revenue.

If that’s not an option, you can turn to sources like grants which you don’t need to pay back. 

Buying on credit, bank loans and support from friends and family are other options – if you’re confident you can pay for your purchases later.

If you can’t secure credit for one reason or another, consider offering a share in your company. This can happen through angel investors or venture capital firms if you’re at a later stage.

Finally, consider alternative financing options like peer-to-peer lending or reward-based crowdfunding.

Where that’s not enough, you can create a side business or set up a joint venture with another business to finance your company.

Whichever type of business funding you choose, the crucial thing is to approach the topic with care and make sure you avoid risky moves.

You might also like:

• How to Conduct Market Research for Tour and Activity Companies
• The Top Online Travel Agencies for Selling Tours and Activities
• 10 Ways To Get Free Advertising For Your Tour Or Activity Business
• How to Set Up an Online Store for Your Leisure Business
• The Best Content Management Systems For Tour And Activity Operators

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